Chips rise after Nvidia’s $50M AI investment, Broadcom deal approval

Semiconductor stocks were largely in the green on Wednesday, July 12, aided in part by a large investment by sector giant Nvidia (NASDAQ: NVDA) and acquisition approval for Broadcom (NASDAQ: AVGO). Nvidia (NVDA) shares rose 3% after the company said it would invest $50M into biotech company Recursion’s (RXRX) AI models used for drug discovery. Recursion (RXRX) will utilize Nvidia’s (NVDA) cloud platform to train its AI models using over 23 petabytes of biological and chemical datasets. Recursion (RXRX) shares soared 82% on the news.

June CPI Comes in Below Expectations

The highly anticipated June CPI inflation print came out Wednesday with a strong show of accelerating disinflation as headline CPI slowed to 3% and core to 4.8%. Following a skipped hike at last month’s FOMC meeting, continued progress in the multiyear fight on inflation was crucial. The data now points towards an optimistic scenario where growth can remain resilient while inflation cools, supported by the S&P’s rally to a new 52-week high. Market sentiment has shifted towards the idea that July’s expected 25bp hike could finally be the last of the cycle, however, the Fed will remain cautious. 

Mercedes-Benz announces partnership with Tesla’s NCAS Charging Port for EVs

On Tuesday, July 11th, Mercedes-Benz becomes the first major luxury car company to partner with Tesla and incorporate their North American Charging Standard (NCAS) port in their cars, giving its customers access to more than 20,000 charging stations across the country. After the announcement, the market has seen a 3% increase in the stock price of Mercedes-Benz as well as a 5.2% increase in Tesla’s stock price. Mercedes-Benz will report its next EPS on July 26th, 2023, and we can expect significant increases in future reports as well. In the future, we can expect other major car manufacturers to partner with Tesla’s charging standard to electrify the future further.

Big-Bank Earnings

With the release of bank earnings on Friday, it showed that businesses and consumers are continuing to borrow and spend money despite an increase in interest rates. JPMorgan Chase’s profit increased 67% in the second quarter and Wells Fargo’s increased 57%. The main reason their income increased was due to lending money at higher interest rates. Citigroup’s profit fell 36% although their net interest income was a bright spot for them. Regardless of what analysts and investors have been saying about the economy slowing, they all agree that the results make it easy to forget there was a banking crisis this year. It’s time to see how the economy does for the rest of the year.